State drags feet on Medicaid expansion seen as key to Obamacare

Irma Garcia of Allentown is a nurse who does not have health insurance. Expanding Medicaid, a key part of the Affordable Care Act, likely would help her.

Irma Garcia of Allentown is a nurse who does not have health insurance. Expanding Medicaid, a key part of the Affordable Care Act, likely would help her.

Tim Darragh and Steve Esack, Of The Morning Call

Beginning today, The Morning Call will kick off a series of occasional stories taking a comprehensive look at how the Affordable Care Act will change health care and how Pennsylvanians access it. We will provide useful information to aid you in navigating the new marketplace and policy details to help you become a better consumer of health-care services. The series will continue through 2014, looking at the impact the program has on individuals, businesses and health-care providers. In addition to what you see in print, a full catalog of stories will be available at themorningcall.com.

A few men, mothers with toddlers and a woman with a hacking cough sat waiting for medical treatment last week in a stuffy room at the Neighborhood Health Center on Second Street in Allentown.

If they were like most of those who drop in on the center, which is in one of the city's poorest neighborhoods, they were uninsured.

In a year when the clinic sees 10,000 patients, about 6,000 of them would not have health insurance, said Dr. Abby Letcher, the center's medical director.

That wouldn't be the case, however, if Gov. Tom Corbett would expand Medicaid as proposed under the Affordable Care Act, she said. Since the clinic looks at income when patients apply for reduced-price care, Letcher knows that at least half of them would qualify under an expansion of the program that now covers only very poor disabled adults, pregnant women, children and the elderly.

"We're talking about people who work multiple part-time jobs," she said. "They're trying to cobble together anything they can and the one thing they don't get is health benefits."

Expanding Medicaid, the joint federal-state insurance program, would add single adults and families who typically aren't offered insurance through work and cannot afford individual policies.

Expansion, which the Affordable Care Act promotes, would provide coverage to 350,000-600,000 more Pennsylvanians under 65, including 49 percent of uninsured veterans, according to several independent studies and the state Public Welfare Department. Less than seven months before most of the benefits of the act, also known as Obamacare, kick in on Jan 1, 23 states have decided to expand Medicaid. To entice them, the federal government has agreed to cover all the additional costs for new enrollees for three years before eventually dropping that amount to 90 percent by 2020.

Corbett, who has opposed Obamacare, has not said if Pennsylvania will expand the program.

As attorney general in 2010 Corbett had Pennsylvania join 27 other states in an unsuccessful lawsuit that tried to overturn Obamacare. As governor, he decided Pennsylvania would not set up an insurance exchange for people who will have to buy coverage to meet the new mandate. Instead, the state will be one of 27 whose exchange is set up by the federal government.

Corbett has argued that expanding Medicaid would be expensive and inefficient. One analysis estimated that Pennsylvania's Medicaid spending would rise by $180 million by 2020 if the program grows, and that includes the years when the federal government would cover all of the costs of expanding. Already, Medicaid consumes three quarters of the Department of Public Welfare's $27.6 billion budget, Corbett has noted.

Even before expansion, Medicaid in Pennsylvania was "on an unsustainable path," the governor told U.S. Health and Human Services Secretary Kathleen Sebelius in a Feb. 5 letter.

Bev Mackereth, the state Welfare Department's acting secretary, said Corbett is prudent to wait, given the enormity of the task.

"The governor has asked us to come to him with the information he needs to be able to make a decision to be able to expand Medicaid to possibly 600,000 Pennsylvanians," she said.

Since Corbett made his budget address in February, his administration has not conducted a complete financial analysis of Medicaid expansion, according to a Corbett spokeswoman.

Mackereth said it also has not sent the federal government a formal waiver requesting flexibility to design Medicaid coverage operations that could reduce the state's costs.

She said DPW, with the help of a consultant, is still working on proposals.

"That's our fault," she said.

"We often talk with states, including Pennsylvania, about the flexibility that exists within the program," said Fabien Levy, spokesman for the U.S. Health and Human Services Department." We look forward to working with the state to provide Pennsylvanians with high quality health coverage while also lowering costs in the Medicaid program."

Who would benefit?

Expanding Medicaid likely would help Irma Garcia. The 25-year-old Allentown resident is single and works part time as a nursing assistant for a local hospice. As a part-timer, she isn't offered health insurance and she doesn't qualify for Medicaid under the current stringent income rules.

So when she developed an eye problem last month, she did what hundreds of thousands of uninsured Pennsylvanians do every year — she went to the emergency room. The first treatment didn't work, so Garcia went to another hospital. By the time it was over, she had racked up $3,500 in bills that she can't afford to pay.

It's not her only hospital bill this year. Garcia suffers from depression and because she couldn't afford medication, her condition worsened and she landed in Sacred Heart Hospital's behavioral health unit. She is awaiting that bill.

Corbett, Garcia said, is holding out on the Medicaid expansion because he doesn't know what it's like to be working without health coverage. "If he was in our shoes, I think he would feel differently," she said. "He doesn't know what it's like to work really, really hard and then have nothing."

To qualify for Medicaid, an individual has to have a temporary disability and earn no more than $11,490 a year. A qualifying family of three cannot earn more than $19,530 a year.

If Medicaid is expanded, all single adults under age 65 who earn up $15,857 and three-person households with incomes up to $26,344 would qualify. Those not qualifying will have to shop for private insurance on the exchange. Some will qualify for subsidies to help them pay the premiums.

Obamacare was intended to slow the rising cost of U.S. health care, the most expensive in the world. One of the ways to meet that objective is to reduce Medicare payments to hospitals. Those payments were supposed to be offset by expanding Medicaid, which would reduce the amount of free care hospitals provide.

But the U.S. Supreme Court ruled that the federal government could not force states to expand Medicaid. The ruling turned the mandate into an option.

In its latest report, the Henry J. Kaiser Family Foundation, a California nonprofit that studies health-care reform, said 23 states, including Washington, D.C., were moving forward with Medicaid expansion, 20 have opted not to expand it and eight, including Pennsylvania, were still considering it.

Hospitals in states that do not accept expansion will face a double hit: lower Medicare reimbursements and less revenue from Medicaid.

Locally, those costs continue to rise at big and small providers. Lehigh Valley Health Network hospitals in 2010 spent $14 million on charity care alone. Last year, that figure rose to $24 million. At Easton Hospital, uncompensated care, including charity care and unpaid patient bills, reached $17 million last year.

Meanwhile, expansion would bring Sacred Heart an estimated $1 million-$2 million in additional revenue, said President and CEO John Nespoli.

There's another cost to businesses in states that don't expand Medicaid.

According to an analysis by Jackson Hewitt Tax Service, businesses in those states will pay higher taxes because under Obamacare, employees who qualify would get a tax credit to help them subsidize private insurance premiums. Employers with 50 or more full-time workers would have to pay a tax that the government would use to help cover those subsidies.

Employers in Pennsylvania could have to pay between $56.6 million-$85 million a year in additional charges to cover employees who would have qualified for expanded Medicaid, it said.

A political battle

In a Feb. 5 budget address and the letter to Sebelius, Corbett said Medicaid already was busting the budget and was expected to cost the state an additional $400 million in the coming year. In the letter, he said Medicaid was broken, and that for expansion to work, the federal government had to grant states the ability to mange their Medicaid offerings on an individual basis and to make sure enrollees have jobs.

"To ensure a path to independence, there also must be appropriate incentives for participants to seek and retain employment," the letter stated.

Democratic Sen. Vince Hughes of Philadelphia, who favors expansion, said Corbett should be focused on Pennsylvania's needs, not how the federal government operates. Expansion would cover low-income adults who already have jobs, Hughes said, so he does not know why Corbett would mention employment in his letter.

The people the expansion would help, Hughes said, are serving hot dogs at an IronPigs or Phillies games, stocking shelves, making popcorn at the movies, working in retail and tending to the sick, Hughes said.

"They are busting their ass on a daily basis," Hughes said.

To try to force Corbett to act, Hughes and other Democrats in the Senate plan to push for a vote in the Senate on June 23, six days before the June 30 budget deadline.

Republicans are not in lock step with Corbett on the issue either.

On Wednesday, Gene DiGirolamo, R-Bucks, chairman of the Human Services Committee, filed a bill seeking to expand Medicaid. The next day, DiGirolamo's committee held a hearing in which representatives from the state hospital association, human services organizations and others, touted the benefits of Medicaid expansion.

"I'm getting a lot of criticism for being in favor of this," DiGirolamo said during the hearing. "This is not an easy issue for members of my caucus to get their heads around. I understand the governor's concerns, but in my mind we can find a way to make this fit [for Pennsylvania]."

Rep. Brad Roae, R-Crawford, a member of DiGirolamo's committee, said he does not believe the state or federal government can afford to expand Medicaid. But, he said, he just wants Corbett to make a decision so the Legislature can move on with its work.

Steve Miskin, spokesman for House Majority Leader Mike Turzai, R-Allegheny, said he does not know what will happen to DiGirolamo's bill.

While the Corbett administration has been fighting calls for expansion, it also has been fighting an uphill battle on the policy level.

Three independent organizations — the RAND Corp., the Pennsylvania Economy League and the Legislature's Independent Fiscal Office — came out with studies over the past few months showing an economic benefit to expansion by creating between 35,000 and 44,000 new jobs, many of them in the health industry, and taxable income.

RAND, for instance, said Pennsylvania would forgo $16.5 billion in federal money to cover the extra costs between 2014-2020 without expansion.

The studies predict the state's Medicaid expenses will rise, starting in 2014, regardless of whether Corbett opts to expand coverage. The higher expenses are due to normal inflationary costs and because more people who now qualify but have not signed up for Medicaid will do so when the federal government kicks off a massive television, radio, billboard and Internet campaign about Obamacare in coming weeks.

Those new enrollees would raise the state's share of Medicaid costs by $50 million in 2014 and $120 million by 2020, according to RAND. The RAND and fiscal office reports claim those state expenses would largely evaporate if Corbett and the Legislature opt to expand Medicaid.

The Corbett administration last month attacked the fiscal office's findings, saying it did not consider possible tax changes by the federal government on some Medicaid plans, which would reduce the state's potential income from Medicaid.

The tax fears are a legitimate concern for the administration, said George Hoover, health policy director of the nonprofit Pennsylvania Partnership for Children. However, he said, he believes the state would still have a net financial benefit based on the number of new jobs, economic activity and federal payment match of between 90 percent-100 percent for new enrollees.

The state, so far, has looked at costs but not revenues.

Estimating revenues is a job for the state Revenue Department, but spokeswoman Elizabeth Brassell said she does not know why the department has not done a revenue calculation.

"DPW is sort of running point on this issue," she said.

It's not Public Welfare's job to run revenue projections, Mackereth said, only costs.

Corbett's spokeswoman Christine Cronkright said "revenue generation is certainly important," but the administration decided its "primary focus" would be getting more flexibility in the program to make it more sustainable.

Corbett's administration has said repeatedly that federal officials have left their questions about an expanded program unanswered. As recently as May 30, the administration was asking Washington for flexibility to keep children from low-income families in the CHIP health insurance program, rather than possibly moving them to Medicaid.

Children already routinely move in and out of Medicaid and CHIP, Hoover noted. The movement occurs when parent's income levels dip or rise. He also said federal law mandates states use Medicaid for the most needy children regardless of whether they expand or not.

"This is something Pennsylvania has had to plan for since 2010," Hoover said.

The governor gets policy support from some conservative groups. The free-market oriented Commonwealth Foundation says expansion just puts more people into a failed program many doctors don't accept. "The problem is the Affordable Care Act doesn't give us solutions to the root problem of care being too expensive," said policy analyst Elizabeth Stelle.

She also questioned how the additional federal spending would increase economic activity. More government spending, she said, means more taken out of someone's pocket.

A year of delay

While think tanks, the governor and lawmakers trade barbs and studies, many working poor living without insurance, are making tough choices between basics such as food and utility payments or hospital and doctor bills.

"I hear about it all the time," said Good Shepherd Rehabilitation Network patient accounts manager John Sipko. "They ration their medicine because they can't afford it."

While Liliana Hernandez of Allentown waited for a bus last week, she did the math for her eye care — $165 for a visit to her eye doctor and another $200, when she can afford it, for her prescription drugs. It was ironic to her that when she was working, she didn't have time to get to her doctor, she said. Now that she's unemployed, she has the time, but no coverage and no income.

There's an additional blow to the most needy people: Since Obamacare anticipated that Medicaid would be expanded universally, it made no other provision for the poor to get coverage. So if their income is less than the federal poverty level, they likely won't get Medicaid and they won't qualify for subsidies to buy private insurance.

That's why it's a disappointment to people like Letcher, the clinic medical director, to see the political haggling over something as important to her and her patients as Medicaid expansion. It means that if those working people in her clinic waiting room lived in expansion states like Maryland or New Jersey, they'd likely be covered beginning next year.

But in Pennsylvania, the working poor still don't know if relief is on the way.